Friday, 1 December 2017

How Banks Can Remain Innovative on Continuous Basis in the Digital / AI Era

With technological advancements in Digital and Artificial Intelligence, in coming few years, human beings will get back to their intrinsic nature- ability to apply human wisdom and creativity. Most of the tasks based on mathematics and memory will be delegated to machines.

In Banks, more than 50% of the operations related to regulatory compliance, loan processing, fraud detection are the top candidates to be delegated to artificial-intelligence-powered machines. These AI powered machines will be capable of providing contextual and personalised interactions when engaging with the customer- that too at huge scale! They will be always aware of the spending and investment pattern of the customer. They will be predicting kind of financial needs of the customer- knowing very well that the daughter will goto university education next year.

Soon Amazon Alexa or IBM Watson powered voice capabilities in mobile app/web portals/ IOT Wearables will start delivering consumer-experience use cases where bank’s products will be used like a utility in the background. Customers will give voice command to Watson powered app to plan a dinner. Reservation of a suitable restaurant and UBER will happen in the background. Customers will enjoy the dinner and credit card will get used in background as a utility! Credit card usage will not come to explicit attention of the customer during the entire experience and will cease to remain an active player in customer facing role.

The other trend induced by modern digital technologies is DECENTRALIZATION of TRUST. As of now government appointed authorities publish your credit score. Slowly, trust will move to multiple individuals, institutions, social influencers. Look at the popularity of who publishes your Reputation Score’ based on social media analytics, your personality analysis, awards, key links, most relevant pictures, and “The star” ratings you have earned on sites like eBay, AirBnB, etc. Likes of Twitter, will become institutions of trust. As of now, a small shop-keeper operating on cash transactions does not get a home loan because the way current centralized system of trust operates. But soon, such part of population, which is huge in number, will start getting acknowledged from likes of,  eBay, AirBnB, Amazon, UBER, OLA, etc. Blockchain will be used for tracking almost anything and everything: From food items, to fashion garments to diamond to property. The diagram below depicts the four types of enterprises based on dimension of Trust and Product. The enterprises that remain product centric will lose market relevance sooner or later.

Digital Reinvention, IBM Tutorials and Materials, IBM Guides, IBM Certifications

The Banks need to choose their role in the eco-system for coming 5 years.

Digital Reinvention, IBM Tutorials and Materials, IBM Guides, IBM Certifications

In such a scenario where customer-experience-delivery gets prominence and bank’s traditional products get relegated to utility levels, the banks and its staff would need to reinvent themselves. They would need to dig into their innermost core and manifest creativity to redesign their products and services for customer-experience-led scenarios. Shift from ‘product’ to ‘experience’ will help banks and their staff survive and thrive. This would need invocation of human creativity. This cannot be delegated to artificial-intelligence-powered machine.

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